Manhattan real estate

[beta1607]

One thing about the NYC housing market is that you arent just competing for condos or space in a coop with New Yorkers. Many affluent people from around the country want to have a place of their own in NYC. My cousin lives in a luxury 2 bedroom condo/co-op (im not sure which it is) with Central Park views, doorman and concierge service. He told me that he's never seen many of his neighbors before because they only use the place a few weeks a year when they are in town on business or on vacation. So the decline in the high paying NYC job market may not have a tremendous impact on the high-end housing market.

[howzit]

on a personal note,

i'd prefer not to see my friends stretch themselves out to the limit. new york is one of the best places to live when there's loose cash to throw around. and although everybody i know has at one point overextended themselves/gone broke,
it really dampers things when we're all trying to have a social life.

it'll be laughable when your friends want to eat out but you can't unless it's a broker dinner...or travel overseas and you're stressing about the dollar moving against you or worse if your daughter wants something you can't provide because you're pinching pennies to live in a 1800 sq ft of opulence.

but that's just me. liquidity really helps me sleep comfortably at night.

[Tweety]

Great post. Really appreciate the wisdom.

I guess my wife and I are just sick of being renters and want to be owners. Maybe this is a mistake. We've held off on buying for a while and don't feel like this has paid off really.

I do have a pretty good job. I have done pretty well in the past few years but am looking at a significant income upgrade this year (get paid the bonus in Jan of 08), so I have the problem of having to convince boards that my incomes in 05 and 06 don't look anything like what my income in 07 will look like. My boss and I have already talked about compensation and we both know more or less the ballpark of what it's going to be, but he can't legally guarantee something in a letter to a board, due to legal issues. My only out here would be to strong-arm him and the firm in general to guaranteeing me something (with a threat to quit if they don't), but that is not something I want to do as I've been treated well there so far and have a very good relationship with senior management.

So basically that's where things are. Maybe I should just rent another year and then look again in 08 with the higher income profile that I'll bring to the table, but we just had our first baby a few months ago and the wife is getting antsy for an upgrade, and quite honestly i dont blame her.

[Tweety]

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You cannot come close to buying a $2,000,000 apartment in Manhattan on a gross household income of $400k.

Maintenance alone is anywhere from $2,500 to $4,000 a month, you have your mortgage payment, and then you have all the other uber-expensive costs of living in Manhattan.

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Sure you can. Cost of living in Manhattan isn't really that much higher than anywhere else, if you're willing to economize - plenty of people live here on $40,000 or less, while paying $1000+ for rent. Maintenance is cheaper for a lot of new buildings ($1000-$2000), tax is negligible and monthly payment (assuming a $1,600,000 mortgage) should be 11000-12000 (some of which should be tax-deductible, AMT notwithstanding).

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If your income at a wall st firm is 400k, you're looking at a bonus of maybe 280 or so, of which 20% goes to restricted stock. so that's 56k to stock that you can't touch for years, and then you have to pay uncle sam his 45% cut. So you're left with a check for maybe $125k in cash.

When you factor in the cost of going out in the city, weddings, food in general, clothes, car payments/garage/insurance, life insurance, kid costs, you're not going to be able to afford a $2 mil apartment on $400k. I just don't buy that.

I guess if you never left your apartment and ate ramen all year and had no furniture, and had no help at all for your kid and did nothing above and beyond taking the subway to your job and eating grocery store food every day, maybe you could just get by, but that's a miserable existence, especially if you have a stressful job.

[Tweety]

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Howzit,

Good point about all the condos coming tomarket. Manyo f these have been pre-sold. However, I suspect that many were to "investors". When these buildings are finished I think you will see a number of rentals in these condos at the same time as yet newer condos are tryig to sell theris. Unlike coops owners who,as I often here, can choose not to sell if they do not like prices, condo developers must sell and there is a still a lot more inventory coming online. However, to date, these condos have been selling pretty well. It will be interestng to see how that market develops inthe next 6-12 months.

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We're looking very seriously at taking down a 3 BR at a new condo development on 74th and 2nd at $2.7 mil. It's not cheap, but it's only 10% down and no ridiculous co-op board liquidity requirements to worry about. Also, the place is SICK. A+ appliances and super-high end everything in the apartment. Also, for re-sale, you don't have to get board approval for your buyer. And for kids, these new condos are great. All sorts of incentives for families.

I may just do this and be done with this whole process. I'm fairly certain I could sell this easily if I wanted to. Young new families in NYC these days are looking more and more at the high-end modern condo developments.

[Tweety]

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Dude, just live where I live, in Harlem... or go to Queens or Brooklyn..

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Why?

If i'm going to live there, I might as well move to Jersey where I can have a back yard and a pool.

[Phone Booth]

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If your income at a wall st firm is 400k, you're looking at a bonus of maybe 280 or so, of which 20% goes to restricted stock. so that's 56k to stock that you can't touch for years, and then you have to pay uncle sam his 45% cut. So you're left with a check for maybe $125k in cash.

When you factor in the cost of going out in the city, weddings, food in general, clothes, car payments/garage/insurance, life insurance, kid costs, you're not going to be able to afford a $2 mil apartment on $400k. I just don't buy that.

I guess if you never left your apartment and ate ramen all year and had no furniture, and had no help at all for your kid and did nothing above and beyond taking the subway to your job and eating grocery store food every day, maybe you could just get by, but that's a miserable existence, especially if you have a stressful job.

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1. Who said anything about Wall St or restricted stock? Either restricted stock has value that you can count on or it doesn't. And bonus =/= real income unless you're talking about minimum expected or guaranteed.

2. What kid costs? Note that I was not talking about your particular situation.

3. Uncle Sam does not take 45%. Besides, even if he did, you'd be looking at after-tax cash of $18,920, according to the #'s you provided.

4. You don't need a car in Manhattan

5. Your company provides for life insurance

6. Basic food and clothing are only marginally more expensive in the city.

7. Ditto for going out. More options =/= more expensive

8. Furniture = fixed cost

[pig4bill]

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for those that aren't in nyc....manhattan real estate has very little correlation to the national real estate market. there's a limited supply and people who are willing to sell their apts can take it off the mkt and wait until a more favorable time OR the developers who have units coming unto the market can convert that into rentals. the thought that prices will come down in this crunch is pretty much null.

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Yeah, right.

http://www.nysun.com/article/60352

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"I've been doing this 20 years -- I've never seen anything change this fast," a vice chairman for the brokerage firm Prudential Douglas Elliman who works with the high-end residential market, Dolly Lenz, said.

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[pig4bill]

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He's expecting quite a few hedge fund blowups and shrinkage of trading desks and investment banking in general,

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this already happened. however, you're forgetting the funds that shorted the insurance/housing/mortgage companies. plus, you're looking at mostly credit desks, not the equities, fx, commodities desk who are doing brisk business. (although nobody knows how long equities can hold on.)

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To quote the song, it's only just begun. Unless there is a sudden turnaround, there will be quite a few less people working on Wall Street at the end of the year than now.

[Tweety]

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If your income at a wall st firm is 400k, you're looking at a bonus of maybe 280 or so, of which 20% goes to restricted stock. so that's 56k to stock that you can't touch for years, and then you have to pay uncle sam his 45% cut. So you're left with a check for maybe $125k in cash.

When you factor in the cost of going out in the city, weddings, food in general, clothes, car payments/garage/insurance, life insurance, kid costs, you're not going to be able to afford a $2 mil apartment on $400k. I just don't buy that.

I guess if you never left your apartment and ate ramen all year and had no furniture, and had no help at all for your kid and did nothing above and beyond taking the subway to your job and eating grocery store food every day, maybe you could just get by, but that's a miserable existence, especially if you have a stressful job.

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1. Who said anything about Wall St or restricted stock? Either restricted stock has value that you can count on or it doesn't. And bonus =/= real income unless you're talking about minimum expected or guaranteed.

2. What kid costs? Note that I was not talking about your particular situation.

3. Uncle Sam does not take 45%. Besides, even if he did, you'd be looking at after-tax cash of $18,920, according to the #'s you provided.

4. You don't need a car in Manhattan

5. Your company provides for life insurance

6. Basic food and clothing are only marginally more expensive in the city.

7. Ditto for going out. More options =/= more expensive

8. Furniture = fixed cost

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Do you know anyone who lives in Manhattan, makes 400k or less, and owns a place for $2 mio or more? I'd like to meet this person.

Do you live in Manhattan?